Secrets Of Succession

Succession planning is one of those things growers would rather not think about. Between production and marketing and getting plants to retail on schedule, it’s one subject that is happily pushed to the back burner. But like all important matters, planning for your growing operation’s future is something that shouldn’t be ignored, unless you are someone who thrives on risk.

“Although it is hard to think about your mortality, it is a very necessary process to ensure the longevity of your life’s work,” says Anna Barnitz, chief financial officer of Bob’s Market & Greenhouses in Mason, W.V. “Don’t delay the implementation of discussion, planning and drafting of the necessary paperwork.”

The first generation owners of Bob’s Market & Greenhouses, Robert (Bob Sr.) and Corena Barnitz, who founded the business in 1970, had just begun succession planning in 1995 when Bob Sr. suffered a serious heart attack.

“Thankfully, he pulled through and is still working today,” says Anna. “If things had gone differently, the business may have been lost due to the burden of estate taxes.”

Family Business Planning

Bob Sr. and Corena’s five sons currently are equal stakeholders of the company with their father. While the second generation runs the day-to-day operations and management of the company, Bob Sr. still comes in daily to stay abreast of the operations and makes input on major company decisions, Anna says. The second generation began running the business as it grew. In 1988, the gross revenue of Bob’s Market was under $1 million and 2007 revenue will near the $13 million mark.

While each of the sons initially did his own thing, all eventually came back to the business and found his own niche. The eldest, Bobby, heads up the plug production division, which accounts for 50 percent of gross revenue. He also is very active in the industry, currently serving as president of OFA. Rick, the second son, is head grower overseeing 17 acres of greenhouses. The third son, Scott, who holds a degree in electrical engineering, heads up the five retail stores, the rooted liner division and oversees new product lines. Jeff, the fourth son, who had been a trucker for a national freight company, naturally assumed management of trucking and truck maintenance, as well as construction of new greenhouses and maintenance. The youngest, John, is on the shipping side, overseeing order pulling and finished production.

The transition of ownership began in the mid-1990s, when Bob Sr. began gifting stock to each son in small increments every year, says Anna.

“Over a period of years, the mix of stock ownership desired was eventually achieved,” she says. “While the transition of the running of the business has seemed to fall into place naturally, the paperwork side of transition does not happen without planning. In an industry that seems to go at a pace of 110 percent much of the year, it has been challenging to place the importance on carving out time to sit down and discuss the business side of transition.”

Although Anna says the transition has gone well, hard decisions have had to be made. “For instance, does a son continue to own stock should he not have an active role in the business? Our decision was that it was best for our company to develop a ‘Buy/Sell Agreement’ between the shareholders in the event that one sibling should desire to leave.”

She adds that because each company will have unique situations specific to their particular businesses, using a qualified estate planning professional is highly recommended to work through any situations that may arise.

The Sooner, The Better

As CFO of the company, Anna says conveying the importance of the succession process to the stakeholders was the greatest challenge, due to the time demands of a rapidly growing business. And it’s an ongoing process. While the transition of ownership and management from the first to the second generation is nearly complete, the company now needs to plan for succession to the third generation as it enters the business.

“After completing the major steps of transition from the first to the second generations, discussion and succession planning should have continued for the second to third generations,” she says. “With two sons and three third generation in-laws in the business full time, we are once again at the point for discussion, planning and implementation. And again, many hard questions must be asked of ourselves and answered.”

Anna says the process has offered many lessons, the largest of which is that a succession plan cannot be static. “As situations change, the plan should be reviewed periodically and updated,” she says. “What once seemed to fit the plan may in time be too constraining or lenient as time and situations progress. Again, the use of qualified professionals should not be overlooked. They can help minimize the tax consequences of the succession plan.”

To other greenhouse owners who are hesitant to shift their succession plans to that front burner, Anna says it’s never too soon to make plans for your operation’s future. “Get started!” she advises. “Secondly, put it in writing. Should tragedy strike, emotions and grief may easily distort well-meant verbal agreements.”

Five heating systems manufacturers share their latest and greatest products. Tubing And Aluminum Heat Pipes (BioTherm) From Megatube and MicroClimate tubing to DuoFin and StarFin aluminum heat pipe, BioTherm is dedicated to providing heat solutions that can withstand the toughest greenhouse environments. The MegaTube and MicroClimate tubing options are easy to install and ideal for bench or floor heating. The tubing has a conductive heating surface that allows for maximum root-zone heating. The DuoFin and StarFin aluminum pipe options are great for perimeter heating and melting snow trapped in the greenhouse gutter. It can also be useful for bench heating. Both pipe options provide gentle, radiant heat for plants and don’t require welding. TrueLeaf.net Infinite Energy 2 Condensing Boiler (Delta T Solutions) With up to 98 percent efficiency, the IE2 condensing boiler boasts a stainless steel heat exchanger with larger waterways to ensure maximum heat transfer. The product’s design ensures flexibility while […]

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